Strategy FAQ

We are an independent exploration and production company focused on the exploration, acquisition and development of unconventional oil and natural gas resources in the onshore U.S. Gulf Coast, with a current focus on the Eagle Ford Shale in South Texas.

We are currently focused on the horizontal development of significant resource potential from the Eagle Ford Shale. Our management team has extensive experience acquiring and operating oil and gas properties and significant expertise in horizontal drilling and fracture stimulation, which we believe will contribute to the development of our sizeable inventory of drilling locations.

Our primary business objective is to increase reserves, production and cash flows at an attractive return on invested capital. We went public in December 2011 and our common shares are listed for trading on the NYSE under the symbol “SN”.

We recently completed a phase of strategic expansion through acquisitions which accelerated our company’s growth. These acquisitions have strengthened our company by increasing our reserves, production and drilling inventory, thereby underpinning a more robust company and facilitating our access to the capital markets. Below is a summary of our largest acquisitions in 2013 and 2014:

While the foundation of our company is in the Eagle Ford, our long-term strategy focuses on onshore U.S. Gulf Coast resource plays. The TMS is geologically a time equivalent extension of the Eagle Ford and fits perfectly within our strategy. With recent reported third party well results of over 1,000 barrels of oil equivalent per day tracking estimated ultimate recoveries of 600,000 – 800,000 barrels of oil equivalent producing 90% or more oil, the TMS is at an inflection point of its development. Well costs are continuing to decline as operators drill more wells and progress up the learning curve, generating potential returns rivaling those of the Eagle Ford.
Securing a 69,000-acre position in what we believe to be the core of the TMS provides the scale to make this a meaningful new basin for us, and our lease terms enable us to take a measured capital approach to the TMS while the industry de-risks the play.

Within each oil and gas play, there exist “sweet spots” that produce the best wells. While oil companies utilize sophisticated geological analysis to initially identify these formations, ultimately a company must drill wells to determine how productive undeveloped acreage will be. Engineers analyze this well production data along with geologic data (zone thickness, resistivity, depth, pressure, etc.) in order to define the extent of the play and estimate the oil production potential of surrounding land.

In addition to this geologic analysis, several economic factors are factored into evaluating the acreage, including the royalty and lease terms. Leases with plenty of time before expiration and favorable terms are more valuable than leases with onerous conditions and/or limited time left. These factors help explain why prices for acreage may range widely within the same play.

For competitive reasons, we can’t provide too much information about potential targets. Our growth will likely be based on adding project areas or assets with the ultimate goal of high-grading our portfolio in order to focus on the highest rate of return opportunities. We are constantly evaluating opportunities focused on the Eagle Ford Shale and similar geologic regions in the onshore Gulf Coast that align with our expertise. Among the factors we consider: location (onshore U.S. Gulf Coast oil-resource), progress of development underway, and, lastly, timing – we watch closely for the ideal inflection point that balances risk-reward and cost of entry, and try to move accordingly.